Widow as beneficiary on 401k and IRA
I feel like I should know this, but widow is A62 and husband died in 2010. He was A59. He had a 401k and a Traditional IRA. She was/is sole primary bene on both. She has not done anything with them since husband’s death. Plan admin says she can just roll it to her own IRA. If we do that, and the same with his IRA, are there any RMD requirements that must be made up for the intervening 3 years, and would we need to beg forgiveness of the 50% penalty?
Thanks in advance.
Permalink Submitted by Alan - IRA critic on Wed, 2014-04-09 19:50
No, there is no missing RMD. The surviving sole beneficiary spouse does not have to start beneficiary RMDs until the year the deceased spouse would have reached 70.5. That is about another 7 years from now and about the same time she would have to start RMDs if she rolled these over. Therefore, she should simplify things and do the rollovers now and then mark her calendar when her own RMD would have to start. She also needs to name her own beneficiaries as soon as possible. Finally, she should check to determine if her husband ever made non deductible TIRA contribution or had after tax amounts in the 401k or even highly appreciated employer stock in the 401k that would have NUA potential. NUA is lost if those shares are rolled into an IRA.
Permalink Submitted by [email protected] on Wed, 2014-04-09 20:11
thanks for the input.